Developers and product managers from the Gmail team hosted a jam-packed panel at SXSW Interactive yesterday, and talked in a refreshingly honest manner about what they've done and what's coming next—including speed improvements, new features, Buzz, better Contacts, and more.

A recurring topic during the Gmail panel was speed. Gmail Engineer Jonathan Perlow asked the capacity ballroom crowd to raise their hands if they "thought Gmail was slow," and a good number responded (before your Lifehacker editors could gain entrance). Perlow said that users with a huge number of active messages and regular incoming mail were seeing the slowest performance, and that the Gmail team was working on a fix for this conundrum.

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The Gmail team takes speed very seriously. Before introducing drag and drop labeling, the Gmail team had a "show-stopping debate" about whether to have Gmail start processing a user's action when they first clicked down to "pick up" the label, or activate when they released the button. As Product Manager Todd Jackson put it, "Mouse down versus mouse up was a show-stopping debate." In general, Jackson said, new features can't make the cut unless they've proven that their impact on the speed users experience is non-existent or very small.

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The other big topic, as news-savvy readers might have guessed, was Google Buzz. This, too, was covered before we could get an in-person listen, but from news reports, the crowd's tweets, and what was said starting 20 minutes in, the team members who worked on Buzz's integration in Gmail were very honest, forthcoming, and aware of its flaws and the public's apprehension about the new product.

Jackson told the crowd, as he's previously said to reporters, that too much was assumed about how Buzz would work best and be received based on Google's internal testing. Google employees didn't have a strong use case for "muting" their fellow Google employees, and the people they'd want to follow and be followed by closely matched up to their contact lists. In general, too, Jackson suggested that Google underestimated the impact of "having a social, public service appear inside ... what is a very private thing (email) for some people." When the public response to Buzz's shortcomings became apparent, the Buzz and Gmail teams immediately started work on fixing it.

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During the Q&A session at the end, an attendee asked what technologies and methods the team used to change Buzz's sign-up, privacy, and other controls so quickly after launching. The response from Edward Ho, a leader of the Google Buzz team that operates inside Gmail: "We have this amazing technology called work really, really hard." Many Gmail and Buzz team members spent an entire weekend at their desks and slept at the office, panelists suggested. A notable future aspect of Buzz will be its launch for companies' internal use in Google Apps, possibly in three or four months, but more testing and iterative improvements will occur before that happens.

Here's the quick hits of what else was mentioned during the Gmail team's panel:

The team was asked if anything was being done for users struggling with switching between personal Gmail accounts and Google Apps accounts for work, and missing out on great features. Braden Kowitz, a user experience designer at Google, said that Google employees feel the same disconnect between their own Gmail and Google.com accounts, and that a "long and complicated process to fix that exact case" was in the works.

There are plans to improve the "Contacts experience," and, for at least one panel member, the missing features and ease of use issues "keeps me up at night" and "needs to get better." That same panelist said they couldn't get into details of the fixes, though.

Gmail has experimented with placing "fewer, but better ads" inside the web interface, Arielle Reinstein, Gmail product marketing manager, told the crowd. On the whole, Gmail does "a pretty reasonable job of covering (its) costs," Jackson said, despite being one of Google's more expensive services to run, due to the free storage provided and multiple server backups offered.

When determining which types of users and Gmail uses to develop features and fixes for, Gmail now tends toward "Five of seven-day users"—those frequent, devoted users who access their Gmail accounts five of seven days of the week.

Asked whether Gmail would ever open up an API for developers to code add-ons and plug-ins with more official support and stability, Kowitz suggested it was unlikely. Gmail is based on "hundreds of thousands" of lines of JavaScript, Kowitz said, and it's a code base that "changes so quickly." That said, Jackson said the Gmail team "loves" to see third-party functionality being developed, and the team tries to make developers aware of changes they know will affect those products.

Asked why Google Wave wasn't built into Gmail, and if it might one day offer competition for Gmail itself, Jackson said that "We'd much rather cannibalize our own services than have other people do it." Google tries to keep a hand in developing both improvements for its current products and "leap-frog projects." Wave, Jackson said, could be such a leap-frog that "people will be using three, four years down the road."

Gmail adoption is growing faster internationally than in the U.S., Reinstein said, and holds the top spot in email usage in India at the moment, and the number three slot in the U.S., behind Hotmail and Yahoo Mail. Gmail also changes up its feature list in different countries, so that in Ghana, for example, free SMS through Gmail chat is enabled by default, because text messages are more popular than email in that African nation for text communication.

"People complain when we add features, and people complain if we remove features. If we don't do anything to a product, people will complain, after a year or two, that nothing is improving." That was Jackson's smiling response to Gmail's position in adding or taking away Labs or mainstream features. The answer, he said, was developing features that "do the greatest good for the greatest number of users."

Gmail team member Jonathan Perlow, capping off the discussion about Gmail's speed with a laugh-getter: "People thought Gmail got faster when we changed the color. That was awesome."